Why does LEGO The Hobbit end before the third film?

LEGO The Hobbit is a 2014 action adventure game developed by Traveller's Tales, with TT Fusion on the handheld versions, and published by Warner Bros. Interactive Entertainment. It was released in North America on April 8, 2014 and in Europe on April 11, 2014, as the follow up to LEGO The Lord of the Rings. It covers exactly two films: An Unexpected Journey and The Desolation of Smaug.

That limit was set by the calendar. The game shipped in the spring of 2014, and the third film, The Battle of the Five Armies, was not due until the end of that year. The plot section of the game's record is plain about the scope: the game presents the storylines of the first two films, reworked into chapters and given the series' usual humour. A game built and sold that spring could not include a film nobody had finished, let alone seen.

So the ending was announced as an add-on instead. It was reported at the London Toy Fair in January 2014 that downloadable content covering the events of the final film would be released around the time of the film, at the end of that year. Buyers were not told the game was permanently two thirds of the story. They were told the last third was coming as DLC.

It never came, and the honest answer is that the record gives no deeper reason. No DLC was released. Over a year later, in correspondence with GameSpot reported in March 2015, it was revealed that, despite there having been no actual cancellation announcement, there were no longer any plans to adapt the film as DLC, and no plans to adapt it as another game either. That is the whole documented story: a third film that arrived after the game, a DLC announced to cover it, and a quiet decision, never explained in depth, not to make it.